Despite a worldwide pandemic, existing-home sales continued to climb in August, marking three consecutive months of positive sales gains, according to the National Association of Realtors.
Each of the four major regions experienced both month-over-month and year-over-year growth, with the Northeast seeing the greatest improvement from the prior month, according to a NAR news release.
Total existing-home sales,1 completed transactions that include single-family homes, townhomes, condominiums, and co-ops, rose 2.4% from July to a seasonally-adjusted annual rate of 6.00 million in August. Sales as a whole rose year-over-year, up 10.5% from a year ago (5.43 million in August 2019).
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” said Lawrence Yun, NAR’s chief economist in the news release. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”
Median Existing Home Prices Up
The median existing-home price2 for all housing types in August was $310,600, up 11.4% from August 2019 ($278,800), as prices rose in every region. August’s national price increase marks 102 straight months of year-over-year gains.
Total housing inventory3 at the end of August totaled 1.49 million units, down 0.7% from July and down 18.6% from one year ago (1.83 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from 3.1 months in July and down from the 4.0-month figure recorded in August 2019.
Scarce inventory has been problematic for the past few years, according to Yun, an issue he says has worsened in the past month due to the dramatic surge in lumber prices and the dearth of lumber resulting from California wildfires.
“Over recent months, we have seen lumber prices surge dramatically,” Yun said in the release. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
More Growth Ahead
Yun added the need for housing will grow even further, especially in areas that are attractive to those who can work from home. As highlighted in NAR’s August study, the 2020 Work From Home Counties report, remote work opportunities are likely to become a growing part of the nation’s workforce culture. Yun believes this reality will endure, even after a coronavirus vaccine is available.
“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” he said. “To assure broad gains in homeownership, more new homes need to be constructed.”
Properties typically remained on the market for 22 days in August, seasonally equal to the number of days in July and down from 31 days in August 2019. Sixty-nine percent of homes sold in August 2020 was on the market for less than a month.
First-time buyers were responsible for 33% of sales in August, down from 34% in July 2020, but up from 31% in August 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in August, a small change from July’s figure of 15%, and equal to the August 2019 rate of 14%. All-cash sales accounted for 18% of transactions in August, up from 16% in July 2020 and down from 19% in August 2019.
Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in August, equal to July’s percentage, but down from 2% in August 2019.
“The past few months have shown how valuable real estate is in the country, both to our nation’s economy and to individuals who have been allowed to rethink their location and redesign their lifestyle,” said NAR President Vince Malta, a broker at Malta & Co., Inc., in San Francisco, Calif., in the news release. “NAR maintains robust advocacy efforts on behalf of our 1.4 million Realtors® – including hundreds of thousands of housing providers – to ensure this industry can continue to lead in America’s economic recovery.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.94% in August, down from 3.02% in July. The average commitment rate across all of 2019 was 3.94%.
Single-family and Condo/Co-op Sales
Single-family home sales sat at a seasonally-adjusted annual rate of 5.37 million in August, up 1.7% from 5.28 million in July, and up 11.0% from one year ago. The median existing single-family home price was $315,000 in August, up 11.7% from August 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 630,000 units in August, up 8.6% from July and up 6.8% from one year ago. The median existing condo price was $273,300 in August, an increase of 7.8% from a year ago.
For three straight months, home sales have climbed in every region compared to the previous month. Median home prices grew at double-digit rates in each of the four major regions from one year ago.
August 2020 saw existing-home sales in the Northeast jump 13.8%, recording an annual rate of 740,000, a 5.7% increase from a year ago. The median price in the Northeast was $349,500, up 10.4% from August 2019.
Existing-home sales increased 1.4% in the Midwest to an annual rate of 1,410,000 in August, up 9.3% from a year ago. The median price in the Midwest was $246,300, a 10.7% increase from August 2019.
Existing-home sales in the South rose 0.8% to an annual rate of 2.60 million in August, up 13.0% from the same time one year ago. The median price in the South was $269,200, a 12.3% increase from a year ago.
Existing-home sales in the West inched up 0.8% to an annual rate of 1,250,000 in August, a 9.6% increase from a year ago. The median price in the West was $456,100, up 11.8% from August 2019.
1 Existing-home sale, which includes single-family, townhomes, condominiums, and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. Besides, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Before this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales before 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (before 1999, single-family sales accounted for more than 90% of transactions, and condos were measured only quarterly).
4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions, and investors are from a monthly survey for the NAR’s Realtors Confidence Index, posted at nar.realtor.